Financial crimes regulator Austrac probes Bell Financial Group

The financial crimes regulator ordered an external auditor to assess anti-money laundering compliance breaches at Bell Financial Group.

Austrac has compliance concerns following a period of engagement with the Bell Financial Group.

Bell Financial Group has been hit by Austrac with orders after the financial crime regulator grew increasingly concerned with the behaviour of the group.

The move sees three entities within the Bell Financial Group – Bell Potter Securities, Bell Potter Capital and Third Party Platform – subject to an external auditor who will assess anti-money laundering compliance breaches.

The group will now need to find and pay for an external auditor which Austrac must approve before preparing a report to the regulator all within 180 days.

This comes “following a period of engagement” between Austrac and the Bell Financial Group, a large group of companies not all of which are captured under the external auditor.

The Austrac appointed auditor will be required to report to the regulator on the companies’ anti-money laundering and counter terrorism financing, and ongoing customer due diligence compliance.

The auditor will be required to scrutinise the quality and compliance of the Bell Financial Group suspicious matter reporting obligations and the maintenance of enrolment details within required time frames.

The audit will also require proposals for how Bell Financial Group will implement changes to ensure it meets its regulatory obligations.

Shares in the ASX-listed Bell Financial Group slid on news of the audit, down 2.17 per cent on close.

In a statement the company said appreciated “the opportunity to work constructively with Austrac and the external auditor to ensure that our AML/CTF program is robust and appropriate”.

The audit is set to prove a headache for Bell Potter Securities head of compliance Lewis Bell, who joined the group in 1980.

The businesses released the 25 page notice from Austrac acting national manager regulatory operations Jack Haldane, calling Bell Financial Group to engage an auditor.

The orders from Austrac come in the wake of a rapid run up in client accounts at the Bell Financial Group, which have climbed from 130,000 in 2016 to 220,000 in the first half of 2021.

In 2020 The Bell Financial Group commenced its third party clearing activities through Bell Direct, which began clearing for Macqurie Equities clients in November last year.

Austrac chief executive Officer, Nicole Rose said the regulatory regime was aimed at protecting businesses, the financial system and the Australian community from criminal threats.

“Australian financial services businesses have a responsibility to ensure they devote the necessary resources and processes to comply with their AML/CTF obligations under the law,” she said.

“We will continue to work closely with Bell Financial Group to address any compliance concerns, and take action where any businesses that we regulate are failing to appropriately protect themselves and Australia’s financial system from criminal activity.”

An Austrac spokeswoman said the regulator was unable to comment “specifically on the Bell Financial Group’s matter”.

University of Sydney Law School lecturer Dr Derwent Coshot said it was hard to know what Austrac were concerned about and why they’d hit Bell Financial Group with the orders.

“Austrac are very opaque at the best of times unless they specifically say what it is they are investigating,” he said.

The last time Austrac exercised its auditor powers was when the regulator hit PayPal and Australia Afterpay with orders in 2019.

PayPal’s audit saw the business subject to a gruelling investigation, with the threat of criminal enforcement action on the back of failures by the business for filing requited international funds transfer instructions.

Accounting firm EY were appointed an independent auditors of PayPal, submitting four reports to Austrac.

Austrac clipped Westpac for its money-laundering failures in September 2020, fining the bank $1.3bn.

Originally published as Financial crimes regulator Austrac probes Bell Financial Group